Major UK Infrastructure Contractor Goes into Liquidation – Was Spreadsheet Risk Part of the Problem?

The ripples of the collapse of construction giant Carillion Plc continue to spread – the company owes up to 30,000 businesses approximately £1bn in unpaid costs. The liquidation of these 20,000 employees, multi-billion-pound turnover business has also put thousands of jobs, and its pension fund, at risk.

Already there are calls for a National Audit Office probe, as well as parliamentary scrutiny by the Public Accounts Committee, to fully understand what led to Carillion’s collapse. No doubt, the full details will emerge in due course, but an initial report on The World Tonight programme on 15th January 2018, BBC Radio 4, suggests that spreadsheet risk potentially was part of the problem. In the absence of adequate IT systems, multiple versions of multiple spreadsheets were used simultaneously by multiple offices to manage its subcontractor and employee workload, resulting in poor and unprofitable workforce management. Often multiple contractors were sent to complete the same jobs, harming subcontractor relationships, as well as creating unnecessary additional costs, which impacted its profitability and eventually its existence.

This catastrophe is yet another example of the impact that spreadsheet errors can cause to businesses of all sizes. Many still use spreadsheets to manage critical business processes. In Carillion’s case, it was using spreadsheets in a seemingly unmonitored and uncontrolled manner for subcontractor and employee workload management – a function that was fundamental to its business.

While we wait to see exactly what happened at Carrillion, it would not be the first time that a successful business has been laid-low by something as innocuous as a spreadsheet. We anticipate that if spreadsheet risk proves to be an issue, that organizations will look afresh at how best manage and mitigate its risk – across the board including in finance and audits.

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